When undergoing IT business model transformation, focus on three key areas to ensure success: process, governance, and culture.
The search for customer obsession is heavy – riddled with obstacles that hinder progress. Maturing the customer experience and improving business agility are key drivers for operating model transformations. However, Forrester’s research shows that less than 45% of transformations achieve these goals.
Why is this? At a high level, that’s because tech executives don’t methodically design and then continuously improve IT business model, prefer to reorganize their org chart and redistribute workloads or outsource the problem to third parties. These tech executives focus on speed and change, but often fall short of their goals.
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Successful technology leaders design an IT business model that can adapt to ongoing disruptions while enabling dynamic business demand that delivers superior customer and employee experiences.
The secrets of designing a high-performing future IT business model
Many technical executives remain solution- or service-oriented, largely ignoring IT’s primary mission: to enable external customers and/or internal employees to achieve desired outcomes through the use of technology. That’s why customers and employees should be at the center of your IT business model. Those technical executives who design high-performing future fit The IT business model always starts with customers before moving to outcomes and value delivery and finally moving to operations.
If you’re considering transforming the IT operating model and want to increase your chances of success, focus on three key areas: define a formal design process for the operating model, rethink IT governance, and drive culture change.
Define a formal design process for the operating model
Tech executives are still heavily influenced by frameworks. Forrester’s research shows that DevOps (43%), in-house frameworks (43%), and X-as-a-service platforms such as Nexus (41%) are the top influencers of IT operating model design.
In short, tech executives ignore their internal maturity, competencies, context and business needs to adopt and live up to a model that has worked elsewhere. Tech executives can and should be smarter. Technical executives should consider creating an iterative framework for the design of the IT operational model, consisting of the following steps (Image A).
- Make agreements about design principles (foundation layer): Tech executives need to reach broad agreement on how they want the IT business model to perform in the future. These principles will guide the design decisions of the operational model.
- Understand who you serve (customer layer): Tech executives should segment, classify and categorize those they serve rather than take a one-size-fits-all approach.
- Recognize how you create value (service layer): Tech executives need to understand the what, why and how of value delivery to ensure stakeholders receive the optimal experience.
- Identify the capabilities required to deliver value (capability layer): Tech executives must ensure they invest in the core capabilities that add value to those they serve and protect the organization’s technology assets.
- Determine the best structure to perform capabilities (structure layer): Tech executives must form operating units based on effective value delivery rather than isolated IT domains, services or products.
- Provide governance that enables delivery and operations (governance layer): Tech executives must reinvent their governance approach to enable autonomous operating units without compromising regulatory or policy controls.
- Reimagine IT Leadership (Leadership Layer): Technical leaders must develop a people-centric culture that optimizes value delivery while keeping employees engaged.
By applying a process like this, technical executives can understand their current and future context and then determine the appropriate operating model configurations that will help them achieve both their goals and those of their organization.
Rethink your IT governance to focus on strong decision-making
In assessing the effectiveness of the IT business model in achieving organizational goals over the past five years, Forrester has found that governance is by far the biggest barrier to an organization achieving its agility goals. Historically, tech executives have adopted command-and-control IT governance frameworks that become decision bottlenecks rather than enabling effective IT operations and delivery.
Organizations that achieve high levels of agility have built a reliable and robust governance framework that empowers employees closest to work to make decisions. This type of governance framework consists of four main elements:
- Decision catalogs that provide clarity and rationale for decisions
- Role responsibility based on the right decision maker, not seniority
- Individual controls to guide behavior and decision making
- Transparency of decisions within the organization, rather than on a need-to-know basis
Empowered and trusted governance can fail when senior executives do not relinquish control of decisions — that is, they ignore decisions made by appropriate employees or when appropriate employees are unwilling to commit to making decisions.
Drive culture to align behavior with value delivery
IT organizations that can adapt to disruptions often exhibit certain behaviors. They also have a certain culture that is embedded in the design of the business model.
But Forrester’s research shows that few organizations have built a culture fit for the future. When it comes to organizational culture, only 29% of organizations support empowerment, 31% support shared values, 33% encourage employees to spend time on innovation, and 35% enable collaboration.
To succeed, tech executives must instill the commitment and ambition to change by following three steps in a process of culture change:
- Build a shared language around what ‘culture’ means in your organization and agree on why culture change is needed.
- Identify the behaviors consistent with the future culture that exist in pockets and determine how to build them into the culture system.
- Repeat behaviors to ritualize the culture you want to build.
Let your context guide the design of your business model
Attempting to copy and paste another organization’s IT business model is likely hindering your efforts to effectively enable and support your organization in achieving its goals and objectives.
Be bold, be smart and design an operating model in collaboration with the people who will ultimately do the work and get value from your services. Focus on the best way to get work done to deliver value, rather than focusing on IT domains, functions, systems or products. Instead, think customer, think employee, and think value.
For more information on how technology managers can evolve their business model for transformation, visit here.
Gordon Barnett is a principal analyst at Forrester focusing on best practices for business, technology and enterprise architecture transformation. Prior to joining Forrester, Gordon served in a variety of roles, including CIO, CTO, chief architect and general manager of the business unit. He holds a PhD in business administration (specializing in e-commerce consumer behavior) from Northcentral University; an MBA from Huron University; an MA in finance (specialising in M&A) from the London Business School; and a BA (first-class honours) from Kingston University in the UK.